If someone had told me two months ago, in the middle of the expenses scandal, that MPs would go on their summer break without having rewritten the rules of British politics, I wouldn't have believed it. I thought the public demand for change was, for once, overwhelming. Yet, scandalously, that's what's happened.

Attempts to give people the right to sack their MPs have been blocked by Labour and the Conservatives. Attempts to get big money out of politics have been blocked too. And still no action in sight to elect the Lords or create a fair voting system. The government's much-trumpeted parliamentary standards bill and its insipid constitutional renewal bill fall far short of what is needed. They are a model of crab-like caution when bold radicalism is called for.

It's the same story with the banking crisis: for years, banks took insane risks with other people's money. Yet beyond some regulatory tinkering, big decisions to bring sanity to the sector have been ducked. There has been no action to split up the biggest banks or protect high street customers from the risks of casino investment banking, and no blueprint for more balanced economic development.

In banking and politics alike we have the bare minimum: lowest common denominator answers from a government without the imagination or zeal for the radical changes needed. Scratch beneath the limited rule changes and easy rhetoric, and a dismal picture of business as usual emerges. With one eye on the end of the parliamentary session, Labour and the Conservatives have played for time. Only the Liberal Democrats have remained outspoken in support of reform. The despair millions of people feel about an out-of-control banking system and an out-of-touch political elite will only deepen once they realise that neither of the establishment parties has any intention of putting them back in their place.

It is easy to understand the resistance to reform from the Conservatives. Maintenance of the status quo has always been the party's hallmark. David Cameron and George Osborne have highlighted a few eye-catching proposals – abolishing the FSA or cutting back quangos – which give the impression of change; but they leave vested interests in the City and Westminster intact.

Labour, however, was supposed to be a party of progress and reform. As I look across at the rows of listless Labour MPs in parliament, it is hard to remember the optimism and energy Labour had after its victory in 1997. Twelve years on, it has begun to mimic all governments who outstay their welcome – putting their own interests ahead of reform.

Take MPs' expenses. Gordon Brown believes the changes already introduced and the recommendations from Sir Christopher Kelly due later in the year will suffice. Yet any political system that gives hundreds of MPs jobs for life, no questions asked, will always risk being abused. Hundreds of Labour and Conservative MPs are entrenched in constituencies where they know they won't be defeated. Jobs for life may be disappearing in other professions but they remain the rule of thumb in politics. Arrogance and secrecy will persist in our politics as long as MPs are not properly held to account. That is why electoral reform remains such a vital issue.

The same is true of party funding: as long as Labour and the Conservatives protect their trade union and offshore paymasters, money will continue to hollow out British politics.

The Conservatives will never challenge the way in which money and power are distributed. It is a Westminster stitch-up from which they hope to be the main beneficiary. But it is a betrayal of people's hopes for a different future that a Labour government has become so conservative.